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Budget 2018 is a tribute to McCreevy economics

11 October 2017

This Coffee Cup Budget had no central message other than self-preservation

But it had no choice to do otherwise

Because this Government is afraid to make choices.

Beholden to Fianna Fail it ensured that every sector had a gesture.

And there was a former Fianna Fail minister at the heart of this Budget.

It is a tribute to McCreevy economics

Right down to how they paid for it,

Income Tax cuts paid for with tax revenue raised on property transactions.

But if you take home €30,000 a year you’re getting back €2 a week.

We've been down this road before and we know how it ends.

Last night the Taoiseach said he would not bring us back to boom and bust

But the core message of this Budget was McCreevey economics.

Like a bad tribute act,

Keep pretending that you can give everyone a tax cut and increase spending on services at the same time.

That is the myth that has been resurrected in this Budget

That you can be all things to all people.

So lets end the pretence once and for all

When it comes to the hard tacks of politics ----

The biggest political event of the year

Together marching hand in hand goes Fianna Fail and Fine Gael

Fianna Fail so desperate yesterday to have something to say that they resorted to attacking the Oppossition

Fianna Fail are in coalition in all but name with Fine Gael

They are out claiming credit for nealry every measure in the Budget.

Their central influence induced Finian to pretend to be on the verge of resigning so that he could claim credit for a few bits.

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And as I said, how it has been paid for is McCreevy economics.

The sums barely add up.

The Taoiseach last night pledged sustainable steps.

But that of course is the usual spin we have come to expect.

As we all know Budget measures that have a commerical or market moving impact like stamp duty increases are introduced on the night of the Budget by Financial resolution.

The Government attempted to imply that this came in last night to avoid lobbying from the property sector that might undermine it.

But the Budget reality is that if it wasn’t, hundreds of property deals to the value of millions would have been conducted in advance.

But the more serious question is the leaking days in advance that stamp duty would increase.

This is commercially sensitive information – the kind that makes people rush through deals.

The Government and the Department of Finance have serious questions to answer on this.

How many millions of revenue has been lost to the State?

How many options for land were signed on Monday and Tuesday in advance of the Budget resolution?

What revenue has the State lost out on?

And other serious questions have been asked on stamp duty that highlights the McCreevy economics of it all

Will the €376 million it is expected to raise actually materialise?

All the industry now says no, according to today’s papers.

That 2015 and 2016 commercial property stamp duty receipts were inflated in that year.

There are serious questions about the fiscal sustainability of how the Minister for Finance funded his Budget.

If the Opposition Party built a budget on these kinds of measures announced yesterday it would be laughed out of it.

Half of the extra Budget revenue is built on volatile property transactions.

Another €150 million is based on restrictions on corporation tax – impacting intellectual property – it doesn’t get much more volatile than that.

And if an opposition party said it would raise an extra €100 million on tax compliance it would be mocked as making up the numbers.

Yesterday the Government found this money down a sofa.

€50 million on PAYE compliance, €30 million on business compliance, and €20 million on tax avoidance.

It begs serious questions on how much revenue is out there not being collected.

We were told by Department of Finance when costing tobacco increases that these measures would be mostly revenue neutral but the Government is relying on €64 million to come in from this years tax increase.

We would also seriously question the amount they expect to raise on the National Training Fund Levy.

Just a week ago the Department of Finance told us a 0.1% increase in the National Training Fund Levy would yield of €42.5 million.

Yesterday the Minister for Finance expects to get €58 million in 2018, and 63m in a full year from the same tax increase.

I’d like to know where the extra €20 million came from, based on what the Department told us a few week ago.

So when you look at where the Minister is getting his money to fund his cups of coffee it is clear that the sums don’t add up.

All that matters is keeping the show on the road for another year.

They preach prudence and no return to boom and bust

But at the heart of this Budget is McCreevy economics.

10 years on from the beginning of the financial crisis, Fine Gael and Fianna Fail are taking us back down a dangerous path.

Funding tax cuts with volatile tax revenue.

Sums padded out to ensure they add up.

Have we learned nothing?

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And for those with a family member on a waiting list, or those trying to buy or rent a home there was nothing to resolve those problems.

HEALTH

Only one real policy has been agreed by this Do Nothing Dáil

Following months of work, a 10 year fully costed plan to implement publicly funded healthcare was published in May with cross party support.

There was no mention of Sláintecare in the Budget today or implementing the first year of the programme which all in all is quite modest.

Yesterday we saw Slaintecare abandoned by Fine Gael and Fianna Fail.

In our Alternative Budget, Labour committed to funding the first year implementation of Sláintecare.

What this would mean in practice is the removal of inpatient hospital charges and the reduction of prescription charges.

It would expand the provision of home care packages and home help hours, increased services for people with disabilities and an extra €25 million for mental health in the first year

Instead what this Government did to tackle waiting lists of over 600,000 was to allocate an extra €30 million for the National Treatment Purchase fund bringing it to €55 million

This will be welcome for those who benefit.

But in reality it means less funding for public health services and a drop in the ocean of the waiting list figures.

In theory an extra €685m allocated to health on 2017, but if you look at the numbers it’s really only an extra €269 million for services and new measures.

Most of the increase will be for staff costs and the €300 million deficit that will be carried over from this year.

So for families worried about their sick child, or ill parent, they will be able to buy a cup of coffee while they wait in A&E.

At the heart of this budget is a lack of ambition to resolve the problems Irish people face by investing in public services.

HOUSING The sad reality of Budget 2018 is that no real extra money was provided to build new social housing.

No effort to provide an affordable housing scheme.

And we heard it from young people on Prime Time last night.

What use is an extra €5 a week in a tax cut if I can’t afford my rent or even try to buy a home.

The focus should be on public services and addressing the real crises people face.

This budget does nothing to resolve the central question facing young families across Ireland, but particularly in our cities.

Those in work, trying to get by trying to raise a family struggling to cope with rocketing rent and rising home prices.

There has been no effort to provide affordable homes for sale or rent.

No tax on vacant housing and no additional funding for public housing.

We have a failed housing market and it’s time for action from the State to address it.

The capital allocation that the Minister for Finance focused on yesterday was already provided for under the Action Plan for Housing.

The numbers have been already announced many times.

Under Rebuilding Ireland the plan was for 5,900 units to be built, or bought under Part V.

That is exactly the same number announced yesterday.

Labour proposed a costed increase of an extra 5,000 public housing units – built on publically owned land. We have over 700 sites available.

This is the crisis that this Budget ignored.

This is the breakdown of what the State intends provide next year:

- 3,800 homes will be built directly by the state,

- 1,200 will be Part V builds or rebuilt vacant homes,

- 900 homes will be delivered through acquisitions

- and a further 2,000 homes will be secured through long-term leasing arrangements.

For a total of 7,900.

Can anyone in this House tell me where in the private rental market an extra 2,000 units for social housing will come from?

That is why the Government has tried to massage the numbers of homes provided and hide their failure on housing provision by allocating an extra €31 million was provided for renting private social housing

And that just confirms that the only real extra money is for private landlords.

An extra €149 million for HAP

We have a supply crisis and the Government’s response is to allocate more money for renting.

What is needed is direct State action.

As well as no plans for a national affordable housing scheme, we have also seen a missed opportunity to repurpose NAMA to take the lead on the development of affordable housing for the State through approved housing bodies.

Instead, under the newly named Housing Building Finance Ireland (HBFI), the €750m being diverted from the Ireland Strategic Investment Fund

Another private finance vehicle for developers, with no assurance that any housing built will actually be affordable.

We welcome the move to increase the vacant site tax, though we had called for it to be brought forward by a year, it won’t come into force until 2019.

There is no mention of a vacant homes tax in this Budget.

That’s despite it being named as one of the main priorities for the new Housing Minister on his appointment by the Taoiseach.

With more than 100,000 homes lying vacant across the country, this would surely have been an easy win.

For those who are homeless, for those struggling to rent, for those desperate to buy a home for their family

It's tragic that the Government has totally wasted the opportunity to directly fund homes for those who need it

DISABILITY

After much posturing, where is the extra money for disabilities?

There’s no additional money for emergency respite accommodation and no money for children awaiting assessment of needs far beyond the scope set down under the 2005 Disability Act.

The Government managed to allocate €5 million for a Strategic Communications Unit but nothing extra to support children and families with disabilities.

There is nothing in this budget that the National Federation of Voluntary Bodies could point to as an improvement, particularly in relation to the Disability Act and the blatant lack of progress on the issue of Assessment of Needs

The Minister stands indicted of seeking to front load the responsibility for assessments of need onto the disability sector.

It is as clear as day that the legal obligation to provide for assessments rests with the HSE, and by extension the Minister for State Finian McGrath.

The Minister has a duty of care under the Disability Act.

I doubt he knows just how serious that duty of care is.

I don't think Finian McGrath has internalised his responsibilities. Families cannot wait for appeals. They need action. The Minister has provided none.

In the HSE South region there are over 700 people waiting for an assessment of need.

The question must be asked why so little was done in Budget 2018 to support the disability sector.

CHILDCARE

The first question to come up on Sean O’Rourke today was about childcare.

The key question asked was what was there for parents and staff who care for children aged 6 months to 3 years old.

This budget does nothing to reduce the sky high costs of childcare for parents, many of whom are paying up to €1000 a month.

Nothing to increase the universal subsidy to parents in this age bracket.

For €40 million it would have been possible to increase the universal subsidy by €1 an hour or €40 extra a week for parents – a lot more than the cup of coffee they will receive in tax cuts.

Once again no real efforts to move towards supporting a professional staff.

The Labour Party has proposed this year and last funding to provide for a living wage for childcare workers, to bring them in a first step to a living wage of €11.70.

This would cost just over €60 million and ensure we recognise those who look after our children.

This Budget provides a welcome €20 million to extend the ECCE scheme to a full 2 years, and a 7% increase in capitation.

But it does not require childcare providers to ensure this increase goes to staff, nor are there any measures to cap costs on parents.

RAINY DAY FUND

For a Government obsessed with spin over substance the Rainy Day Fund takes the biscuit.

Once upon a time we have a National Pension reserve fund – a rainy day fund.

This became the Ireland Strategic Investment Fund.

And now the Government will take €1.5 billion out of that to seed the rainy day fund.

To keep Fianna Fail happy

But this is pure optics.

The ISIF has had over €5 billion on deposit due to a failure by this Government to invest in Ireland.

Now instead of finding off balance measures to boost housing, transport or broadband, this money will be left on deposit.

All while a Budget is crafted on unsustainable tax increases.

EDUCATION

Last year Labour proposed a reduction in the pupil teacher ratio at primary and second level.

But it also begs the questions, what have Fianna Fail against secondary school children

They fought for a token measure on primary schools having failed to deliver on their commitment last year.